Lines of credit to buy RE

1 Reply

Is it very common to use LOCs, whether heloc, business or personal to buy real estate? How many do this regularly?

Do you buy with the LOC basically same as cash then ReFi out later to pay back down the LOC?

Sorry a lot of questions in one.

Using a HELOC is a very common method to purchase new investment property as it allows you to leverage your current properties and put the money into a new door without using your own cash in the bank. After closing, you could potentially get all of the investment put in by the HELOC back out if it was a BRRRR and could pull enough equity. Once your funds are returned you could do the same strategy again provided your DTI can hold up.

If it was a rent ready home then then you might have a harder time getting your HELOC funds back as there will be no significant increase in value. While you might not be able to get all the cash back once you begin cash flowing you should be able to pay back the HELOC so that you can use the HELOC to Invest again.

Best of Luck!

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